Consumers soured by high milk prices

Although the dairy products sector maintains a very high growth rate with an average annual increase of 24.7 per cent between 1997 and 2009, Vietnamese customers’ consumption of dairy products remains very low.

According to the Tuoi Tre (Youth) newspaper, a Vietnamese person drinks nine litres of milk per year on average, much lower than the 23 litres by a Thai and 25 litres by a Chinese counterpart.

Furthermore, only a small fraction of residents in rural areas can afford dairy products. The newspaper said 78 per cent of milk products were used by residents of Ha Noi and HCM City.

In fact, some people have attributed the unusually high prices to low consumption of milk in the domestic market. A survey conducted by the Customer Protection Division under the Ministry of Industry and Trade found prices of imported canned powder milk in Viet Nam are 20 to 40 per cent higher than in other Asian countries.

Nguyen Tuan Khai, deputy chair of the Viet Nam Dairy Association (VDA) was quoted by Tien Phong (Vanguard) newspaper as saying that the foreign dairy product prices are “unreasonably high.”

Khai observed that big dairy groups have set up their factories in Thailand and Malaysia, which allows them to sell products to all of Southeast Asia and also enjoy preferential tariffs under ASEAN.

Soon after it was established on 26 March 2010, the association noted that if the current situation cannot be improved, consumers will suffer.

“We should open doors to all foreign producers, with no discriminatory treatment for ASEAN producers. If so, dairy producers will have to compete with each other and the competition will force the prices down,” said Khai.

Meanwhile, the deputy head of the Price Control Agency under the Ministry of Finance, Nguyen Anh Tuan, has rejected the criticism of foreign business associations in Viet Nam that the State intervenes too deeply in business operations in terms of pricing.

Tuan argued that a fair playing field for both domestic and foreign players must be established. He added that it is unfair to force domestic players to register prices with government agencies, while foreign players are exempt.

Tuan said through diplomatic channels, the Price Control Agency has been informed that foreign dairy producers do not want to register prices for their products with Government agencies.

Labour market expands

The labour market grew sharply in the second quarter, indicating a recovering economy, according to a report prepared by VietnamWorks.com.

Labour demand grew by 28 per cent compared to the last quarter and supply by 27 per cent, according to the recruitment company’s Online Employment Indicator Report.

Chris Harvey, general director of VietnamWorks.com, said, “Employers are now more confident in hiring more people to expand their business.”

The report ranks labour demand and supply by both function and industry in HCM City and Ha Noi.

In terms of function, supply was highest for accounting/finance jobs which had a 39 per cent lead over second-ranked administrative/clerical work.

Demand remained highest for sales, accounting/finance, administrative/clerical, IT-software and marketing jobs.

In terms of industries, supply was highest for banking, accounting/auditing, electrical/electronics, civil construction and mechanical jobs.

Demand remained highest for civil/construction, accounting/auditing, banking, electrical/electronics, and mechanical jobs.

Ha Noi continued to lead the online labour market in terms of demand, but its lead over HCM City has steadily shrunk to 10 per cent now from 24 per cent in the second quarter of last year.

Taiwan firms claim losses

Although 104 of the 111 foreign direct investment (FDI) enterprises currently operational in the Central Highlands province of Lam Dong have reported continous losses for several years, most of them are seeking opportunities for business expansion.

According to the Lam Dong Taxation Bureau, of the 104 FDI enterprises reportedly suffering continous losses, 39 are Taiwanese-invested enterprises specialising in processing O Long (Black Dragon) Tea for export.

The Dau Tu (Investment) newspaper quoted an official at the provincial Taxation Bureau as saying that no corporate income tax was collected from these FDI enterprises for several years because export prices of its products were lower than production costs and selling prices of the tea in the local market.

As a result, these FDI enterprises have always reported losses, with some accumulating losses exceeding the projects’ registered capital.

The tax official said the foreign-invested tea processing enterprises are using 18,000 ha or three-fourths of the 24,075 ha under tea cultivation in Lam Dong Province, and that they export over 90 per cent of the province’s tea output.

A report from the provincial Taxation Bureau reveals that these FDI enteprises paid VND35,000 for each kilogramme of tender tea leaves, and can make one kilogramme of tea for export from five kilogrammes of these raw materials.

Without other production costs, each kilogramme of O Long Tea costs around VND175,000 to produce. But the recorded export price of this products was only US$4 (VND76,000) per kilogramme. At the same time, O Long Tea is sold for VND1.2 million per kilogramme, 18 times higher than its export price, in the local market.

The tax official said this was a method of “price transfer,” a way to evade taxes in the producing countries while giving huge profits to parent companies abroad. He explained that through the “price transfer mode,” these tea processing enterprises have transferred their profits abroad through (lower) selling prices of their products. — VNS

Tags: Vietnam milk, Vietnam milk prices